Heckman two-step selection model was used to analyze influences of household, business, and lender-related
factors on the decision to participate and level of participation in formal microcredit using data from a survey of
Micro and Small Enterprises (MSEs) in Sudan. Results suggest measures to strengthen business skills of MSEs
managed by women, lower income owners, and relatively disadvantaged migrants, through increased awareness,
training and other complementary mechanisms to increase their participation and demand for microcredit.
Innovative measures to ease constraining lender-related factors such as collateral requirements and loan
processing time need to consider lending to beneficiary groups (e.g. cooperatives) to reduce risks of repayment
defaults. It is clear that the Murabaha mode of finance needs to be reformed and alternative lower risk options
be provided as well as balancing the current unequal distribution of bank branches to improve access and reduce
costs to potential clients in currently lacking areas.